Michael Gangadeen has been an attorney long enough to know that while
arbitration has the obvious benefit of keeping disputing parties
outside of the court system, it has its drawbacks. He’s worked in the
profession for more than 20 years, during which time he’s learned to
understand that arbitration might not be the answer for many legal
disputes. The following are a few drawbacks of the process, as
highlighted by Mr. Gangadeen.
No guarantees
With arbitration, there are no guarantees that the process will be fair. A decision made in arbitration proceedings is binding on both parties, whether they like it or not. Plus, there’s no right to appeal, so the parties might be at the whims of the arbitrator. This is probably the biggest disadvantage of arbitration.
In the event one party is concerned that in the event of a dispute the matter may be deliberated by a large jury, that party would want to include an arbitration clause so as to ensure disputes don’t end up in court. For example, an employer who is concerned about a large jury verdict on a wrongful termination dispute might insist on an arbitration clause in the employment contract. Likewise, a medical provider would want patients to agree to an arbitration clause if they see the potential jury award in a malpractice lawsuit.
Ironically, as Mr. Gangadeen notes, the presence of an arbitration clause may encourage parties to dispute about an issue unnecessarily. Without an arbitration clause, the parties might be more motivated to compromise rather than opt for lengthy court proceedings. If the arbitration clause is present, there might not be the same motivation and parties may opt to dispute rather than work out their differences.
No guarantees
With arbitration, there are no guarantees that the process will be fair. A decision made in arbitration proceedings is binding on both parties, whether they like it or not. Plus, there’s no right to appeal, so the parties might be at the whims of the arbitrator. This is probably the biggest disadvantage of arbitration.
In the event one party is concerned that in the event of a dispute the matter may be deliberated by a large jury, that party would want to include an arbitration clause so as to ensure disputes don’t end up in court. For example, an employer who is concerned about a large jury verdict on a wrongful termination dispute might insist on an arbitration clause in the employment contract. Likewise, a medical provider would want patients to agree to an arbitration clause if they see the potential jury award in a malpractice lawsuit.
Ironically, as Mr. Gangadeen notes, the presence of an arbitration clause may encourage parties to dispute about an issue unnecessarily. Without an arbitration clause, the parties might be more motivated to compromise rather than opt for lengthy court proceedings. If the arbitration clause is present, there might not be the same motivation and parties may opt to dispute rather than work out their differences.
